What is Medicare? Describe Parts A and B of Medicare.
> What is an IPO? What are the risks associated with buying IPOs?
> What is a growth stock? What is an income stock? Why would investors prefer one type over the other?
> What is an exchange traded fund? How does it differ from a mutual fund?
> How is investing related to liquidity? Give some examples of liquid investments.
> Describe common investment mistakes made by individuals.
> How can you limit your risk through diversification?
> Describe the return-risk trade-offs among bonds, mutual funds, and real estate investments.
> What is the return-risk trade-off? What types of stock investments are particularly tempting for stock investors? What other factors must individual investors consider before making this type of investment?
> Why do investors measure risk? Describe the two common measures of risk.
> Define the risk of an investment. What types of firms are particularly risky?
> Describe how economic conditions might affect certain investments.
> How can investments in stock increase your wealth? How would you calculate the value of a stock investment of a single sum over time? How would you calculate the value of a stock investment of a specific amount over several periods?
> What is the difference in tax rates on long-term versus short-term capital gains?
> What is the formula for estimating returns on dividend-paying stocks? Describe each element of the formula. How do you calculate the dollar amount of your returns?
> In what geographic areas is the price of land relatively high? What components make up the return from investing in real estate?
> How do mutual funds operate? Who manages mutual funds? How are coupon or dividend payments handled by the mutual fund? Can investors incur capital losses with mutual funds?
> What are bonds? How do bonds provide a return to investors?
> Discuss the differences between common stock and preferred stock.
> What type of firm typically pays dividends? What are growth stocks? What are income stocks?
> How do shareholders earn returns from investing in stocks? How is the market value of a firm determined? What determines the market price of a stock?
> Classify and describe the two types of investors. What are day traders?
> What are dividends? Do all firms pay them?
> Distinguish between the primary and secondary stock markets. Why does the price of a stock change each day in the secondary market?
> What is the dollar amount of Joel’s return (see problem 1)? Data from Problem 1: Joel purchased 100 shares of stock for $20 per share. During the year, he received dividend checks amounting to $150. Joel recently sold the stock for $32 per share. What
> Thomas purchased 400 shares of stock A for $23 a share and sold them more than a year later for $20 per share. He purchased 500 shares of stock B for $40 per share and sold them for $53 per share after holding them for more than a year. Both of the sales
> Bob purchased stock in a new social media company for $40 per share shortly after the stock’s IPO. The stock had been heavily publicized on the Internet. Over the next three years, the stock price declined by 15% each year. What is the company’s stock pr
> How much would Joel (from problem 1) save in taxes if he held the stock for more than a year, assuming he sold it for the same amount? Data from Problem 1: Joel purchased 100 shares of stock for $20 per share. During the year, he received dividend chec
> The Sampsons have one remaining insurance need: life insurance. They have decided to purchase term life insurance. They want a life insurance policy that will provide for the family in the event of Dave’s death because he is the major breadwinner. The Sa
> The Sampsons have one remaining insurance need: life insurance. They have decided to purchase term life insurance. They want a life insurance policy that will provide for the family in the event of Dave’s death because he is the major breadwinner. The Sa
> What are living benefits? When might a policyholder use this option?
> What is a beneficiary? Why is it important to periodically review your beneficiaries?
> What is an installment payments settlement? When would an insured individual choose this option?
> What is a lump-sum settlement? What kind of beneficiary would benefit the most from this option?
> What is mortgage life insurance? Is mortgage life insurance a good buy? Why or why not?
> Why is it important to evaluate the financial condition of a life insurance company?
> How do individuals benefit from having health insurance? Why has health insurance received a lot of attention recently?
> Recall that one of the Sampsons’ goals is to invest for their children’s future college education. To become more educated investors, they have been reviewing analyst and brokerage firm recommendations. Dave and Sharon are ready to invest in several stoc
> How are health insurance and disability insurance related to your wealth?
> How did the PPACA change the way insurance companies treat persons with preexisting conditions?
> What types of services are typically covered by vision insurance? Why should some individuals consider buying a separate vision insurance policy?
> What is a health savings account, or HSA? Why is this account often preferable to a flexible spending account?
> Briefly describe some of the significant features of the Affordable Care Act.
> Briefly describe some of the provisions of disability income insurance.
> Briefly describe some of the sources of disability income insurance.
> What are some other types of health insurance that might be offered by an employer?
> What is the purpose of long-term care insurance? What factors influence long-term care insurance premiums? What factors should be considered when purchasing long-term care insurance?
> What is Medicaid? How do individuals qualify for Medicaid?
> Recall that one of the Sampsons’ goals is to invest for their children’s future college education. To become more educated investors, they have been reviewing analyst and brokerage firm recommendations. Dave and Sharon are ready to invest in several stoc
> Briefly describe the provisions of the Medicare Prescription Act
> What is a flexible spending account? Why do some individuals allocate a minimal amount to this account?
> Briefly describe two federal regulations intended to ensure that individuals can maintain continuous health care coverage if their employment status changes
> Compare and contrast the discount on charge arrangement and the per diem arrangement associated with PPOs.
> What is a preferred provider organization (PPO)? How does it operate?
> What questions should you ask when considering an HMO or PPO?
> Describe how an HMO works. What are the advantages and disadvantages of this type of health care coverage?
> Compare and contrast private health care fee for service plans and managed health care plans.
> Who offers health insurance? Do employers offer health insurance?
> What is the purpose of life insurance? Do you think everyone needs life insurance? Explain.
> What should your first priority of investing be? What is the disadvantage of investments that satisfy that priority?
> What is private health insurance? Briefly describe some types of private health insurance coverage.
> Nancy’s employer provides her with two times her annual gross salary in life insurance. How much additional insurance should Nancy purchase based on the information in the previous problem?
> Nancy is a widow with two teenage children. Nancy’s gross income is $3,000 per month, and taxes take about 30% of her income. Using the income method, Nancy calculates she will need to purchase about eight times her disposable income in life insurance to
> What is a “cash value” homeowner’s policy? What is a “replacement cost” homeowner’s policy?
> Why is it important to keep a detailed inventory of your household possessions outside your home?
> How can you determine the financial strength of an insurance company? Why is this important to you as a consumer?
> What is a personal property floater? What is the difference between scheduled and unscheduled floaters?
> When the Sampsons purchased a home, they obtained a 30-year mortgage with a fixed interest rate of 8.6%. Their monthly mortgage payment (excluding property taxes and insurance) is about $700 per month. Today, they could obtain a 30-year mortgage with an
> Denise and Kenny are ready to make an offer on an 1,800-square-foot home that is priced at $135,000. They investigate other homes on lots of similar size and find the following information: A 2,400-square-foot home sold for $168,000. A 1,500-square-foo
> Paul (from problem 11) will be able to save $400 per month (which can be used for mortgage payments) for the indefinite future. If Paul finances the remaining cost of the home (after making the $20,000 down payment) at a rate of 5% over 30 years, what ar
> What is a conversion option? What are the benefits of having this option?
> Doug and Lynn bought their home three years ago. They have a mortgage payment of $601.69. Interest rates have recently fallen, and they can lower their mortgage payments to $491.31 if they refinance. What would their annual savings be if they refinance?
> What is a bond? What is a bond’s par value? What are coupon payments, and how often are they normally paid? What happens when investors buy a bond below par value? When should you consider investing in bonds?
> What is interest rate risk? How does a rise in interest rates affect a bond’s price?
> What is the risk to investors on bonds that have a call feature?
> Discuss default risk as it relates to bonds. How may investors use risk ratings? What is the relationship between the risk rating and the risk premium? How do economic conditions affect default risk?
> Discuss the effect of taxes on bond returns.
> When an investor sells a bond in the secondary market before the bond reaches maturity, what determines the return on the bond? How do interest rate movements affect bond returns in general?
> What are corporate bonds? Are corporate bonds subject to default risk? What are junk bonds? Why would investors purchase junk bonds?
> What are federal agency bonds? Compare and contrast the three most common federal agency bonds
> What are municipal bonds? Why are they issued? Are all municipal bonds free from default risk? What characteristic makes municipal bonds especially attractive to high-income investors?
> What are some factors that make estimating life insurance needs difficult?
> What are Treasury bonds? Describe their key characteristics.
> Discuss how bonds are sold on the secondary market.
> What is a bond’s yield to maturity? How does the price paid for a bond affect its yield to maturity?
> What is a convertible bond? How does a bond’s convertibility feature affect its return?
> What is a call feature on a bond? How will a call feature affect investor interest in purchasing the bond?
> What is the purpose of insurance? What is meant by the term liability? How can individuals benefit from insurance?
> You teach Personal Finance at a local community college. The state in which you teach requires proof of liability insurance to renew your license plates. During the discussion of this topic in class, several students admit that they obtain a liability po
> Why is it important to carefully review the types of perils covered by your homeowner’s insurance policy? What are some common perils that are not covered by many homeowner’s policies?
> How does your credit history impact your insurance costs?
> Why does your geographic location impact the cost of homeowner’s insurance? Why does it impact the cost of your automobile insurance?
> What is group term life insurance? What are the advantages of group term life insurance?
> Why do some people choose to accept risk rather than purchase insurance? Why is this mind-set problematic?
> List some ways you can reduce risk and limit your overall exposure to loss.
> What is the purpose of an umbrella personal liability policy? Who might need one?
> How renter’s insurance is different from homeowner’s insurance? Who should consider purchasing renter’s insurance? Briefly describe some of the provisions of a renter’s insurance policy.
> Describe the steps you would take to file a claim on your homeowner’s insurance
> What are some steps you could take to reduce your homeowner’s insurance premium?
> List and briefly describe some of the factors that affect homeowner’s insurance premiums.
> Is personal property typically insured under a homeowner’s insurance policy? If so, are there limits to the coverage of personal property? What is a home inventory?
